THE IMF’S latest forecasts, released on October 13th, spell out just how long the economic harm from covid-19 will last. America’s gdp will return to its 2019 level only in 2022; Italy’s, in 2025. The fund reckons that in many places output will stay well below its pre-pandemic trend, as labour and capital are only slowly reallocated from shrinking industries towards thriving ones. Last October the fund expected India’s economy to grow by more than 40% by 2024; now it expects half that.
Euro zone economy at risk of double-dip recession, PMIs show – The Globe and Mail
Euro zone economic activity slipped back into decline this month as a second wave of the coronavirus sweeps across the continent, heightening expectations for a double-dip recession, surveys showed on Friday.
Renewed restrictions to control the pandemic forced many businesses in the bloc’s dominant service industry to limit operations, and nearly 90% of economists polled by Reuters this week said there was a high risk the coronavirus resurgence would halt the nascent euro zone economic recovery.
“The euro zone PMI confirms that the second wave of the coronavirus is weighing more and more on the economy. A double-dip in the fourth quarter is becoming more likely at this rate,” said Bert Colijn at ING.
IHS Markit’s Flash Composite Purchasing Managers’ Index, seen as a good gauge of economic health, fell to 49.4 from September’s final reading of 50.4.
That was below the 50-mark separating growth from contraction and only fractionally better than the 49.3 predicted in a Reuters poll.
That headline PMI was dragged down by the service industry’s PMI, which sank more than expected to 46.2 from 48.0.
“The further decline in the euro zone Composite PMI in October adds to the evidence that the second wave of infections, and the new wave of containment measures, is taking a heavy toll on the economy,” said Jack Allen-Reynolds at Capital Economics.
Friday’s surveys showed the bloc’s economy is running at two speeds, with manufacturing benefiting from strong global demand but services – which make up the bulk of the economy – struggling to remain active as lockdowns force consumers to stay home and businesses to close.
In contrast, in China – where the economy relies much more heavily on manufacturing and where the pandemic is largely under control – the recovery accelerated last quarter as consumers shook off their caution.
Echoing the divide between services and manufacturing, German factories powered ahead this month, while in France activity contracted as a resurgence of the virus hit the euro zone’s second-biggest economy.
Outside the currency bloc and now outside the European Union, Britain’s economic recovery also lost more momentum as restrictions hit businesses in the hospitality and transport sectors.
European stocks pushed 0.8% higher for their best day in five trading sessions as strong third-quarter results offset the survey data.
WINTER IS COMING
It will likely be a chilling winter for the job market which until now has been shielded by government furlough schemes as the uncertain outlook meant firms reduced headcount for an eighth month.
The composite employment subindex nudged up slightly, but remained in negative territory, while the Reuters poll concluded that the bloc’s jobless rate would not peak for at least six months.
With infection rates and the death toll rising, optimism fell. The services business expectations index dropped to 54.6 from 59.2, its lowest since May when the initial lockdowns were being eased.
A 750 billion euro stimulus plan agreed by the European Union in July to support its suffering economies will be delayed, a senior diplomat said on Thursday, which is also likely to have a negative impact on sentiment.
Still, factories fared much better than expected. The flash manufacturing PMI climbed to a 26-month high of 54.4 and was far above the median forecast in a Reuters poll.
An index measuring output, which feeds into the composite PMI, rose to its highest since early 2018.
Strong demand for manufactured goods meant factories were also able to increase their prices for the first time since mid-2019, albeit only slightly.
That will provide some relief to policymakers at the European Central Bank as inflation, which they want close to 2%, has been negative for two months.
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Europe's Economy Risks New Contraction From Virus Curbs – BNN
(Bloomberg) — The resurgence of the coronavirus has knocked Europe’s economic recovery back a step and raised the possibility of another contraction.
IHS Markit’s monthly measure of business activity fell to a four-month low of 49.4 in October from 50.4 in September. Within the report is a clear, divergent trend of manufacturing strength being offset by damage to services from the second wave of the pandemic.
New government curbs as well as consumer fears of the virus are driving the two-speed economy. In Paris and eight other major French cities, authorities introduced a curfew this month that’s hitting restaurants and bars particularly hard. In Germany, a Bavarian district imposed a two-week lockdown after infections climbed above a rate that triggers an automatic tightening of restrictions.
While the weakness is largely limited to services, the fallout on jobs and spillovers to the rest of the economy will worry policy makers. The deteriorating outlook strengthens the case for the European Central Bank to pump more monetary stimulus into the economy, and governments may have to extend expensive aid programs.
IHS Markit warned that the euro-area economy could shrink again this quarter. Its report said employment fell again in October, confidence deteriorated and orders declined.
“While the overall downturn remains only modest, and far slighter than seen during the second quarter, the prospect of a slide back into recession will exert greater pressure on the ECB to add more stimulus and for national governments to help cushion the impact of Covid-19 containment measures,” said Chris Williamson, chief business economist at IHS Markit.
©2020 Bloomberg L.P.
ECB Seen Preparing More Aid as Virus Spread Derails Economy – Yahoo Canada Finance
As renewed scrutiny grows around the death of 15-year-old Wally Rich, Newfoundland and Labrador’s child and youth advocate says the situation is a tragedy, and her office’s ability to investigate is held up in bureaucratic limbo.Rich, from Natuashish, died by suicide while at a group home in Labrador in May, nearly three years after the provincial government promised an inquiry into Innu children in care.Jackie Lake Kavanagh, the child and youth advocate, said any ability to do her own investigation into Rich’s death is on hold, as by law she cannot look at or investigate a matter until the Child Death Review Committee has completed its own review. She has yet to receive a file from that committee, she said, and added the awaited inquiry is also standing in the way.She wants to see if Rich’s case will be included in that inquiry, which will determine whether she can proceed with her own investigation. That’s one more reason she feels the years-long delay for the inquiry is unacceptable.”When you look at the sense of urgency, this should have been happening already, and Innu children are struggling in the system and this is a prime example of it,” she said. Kavanagh said it’s inexplicable to her how the province hasn’t moved ahead with the inquiry yet. “This inquiry was committed more than three years ago, and if you look back beyond that, the Innu people were demanding and asking for that inquiry before it was committed. So, it goes back much more than three years,” said Jackie Lake Kavanagh. “I think the piece that they want is, they want answers, they want accountability and they want reconciliation, and they’ve said that. And I think those are very reasonable requests to make.”Troubling statisticsAs of March, there were 165 Innu children in provincial care. It’s clear to Kavanagh that Rich is not the only one who encountered problems with the system.”It’s not unique which is really, really tragic,” she told CBC Radio’s St John’s Morning Show.Her office is seeing troubling statistics in the province.Legislative changes to the Child and Youth Advocate Act in 2018 meant her office has to be notified if a child is critically injured or dies while in care and custody, or within the last 12 months of care and custody.”Between April 1, 2019 and the end of September this year, we have had 75 reports, and 60 per cent of those have been around suicide attempts or suicide ideation,” Kavanagh said. “That’s really, really significant in this little province of ours.”Kavanagh said Indigenous children and their communities have been marginalized for a long time, and the impact of intergenerational trauma is working its way through younger generations. She said Rich’s death is heartbreaking, and it’s part of larger, systemic issues that are pervasive across Canada.”When you look at the situation across the country, in fact, between 10- and 24-year-olds suicide is the second leading cause of death, and that is really, really troubling,” Kavanagh said.”I think all of us should be left with a whole sense of unrest about that.”Kavanagh said a lot more work needs to be done, particularly a plan dedicated to youth and children in the province’s suicide prevention strategy as well as services dedicated to Indigenous children based in their culture. Where to get help:Canada Suicide Prevention Service: 1-833-456-4566 (phone) | 45645 (text) | http://www.crisisservicescanada.ca/ (chat)In Quebec (French): Association québécoise de prévention du suicide: 1-866-APPELLE (1-866-277-3553)Kids Help Phone: 1-800-668-6868 (phone), Live Chat counselling at www.kidshelpphone.caCanadian Association for Suicide Prevention: Find a 24-hour crisisRead more articles from CBC Newfoundland and Labrador
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